03 Oct 2022

Bitcoin miners’ revenues have plummeted by 81% since the peak

Bitcoin mining firms have seen massive reductions in their revenues. At the same time, their costs are fixed, leading to enormous margin compression.
Source: Hashrate Index
Hashprice is a miner’s daily revenue per TH/s of hashrate. The hashprice is determined by the mining difficulty and the bitcoin price. The current depressed bitcoin price combined with the ever-increasing hashrate has led the hashprice to fall to $0.077 per TH/s, its lowest level since mid-2020.One of the most important aspects of mining economics is that a miner has relatively fixed operating costs but highly fluctuating revenues. The cost of running a mining machine depends on the energy price, which historically has been stable, although most miners have seen significant increases in their energy prices this year.At the peak in October 2021, the hashprice reached $0.422 per TH/s, meaning that the hashprice has fallen by 81% since then. For companies with fixed costs, an 81% decline in revenue naturally has a massive impact on margins, and most public miners have seen their gross margins plummet from 80-90% to 30-40%.The depleted hashprice’s impact on miner revenues becomes clear when looking at the scale of major mining firms. 1 EH/s of mining machines raked in $422k per day in October 2021, but only $77k now. Most public miners have several EH/s of capacity, with the biggest, Core Scientific, operating a self-mining fleet of 12.7 EH/s.Mining economics are likely to keep worsening as the bitcoin price stays depressed at the same time as the global hashrate surges. Most public miners are now praying that the bitcoin price doesn’t fall further. If it were to fall below $15k, we would likely see some of the highest-debt public miners capitulate, as their revenues would not be sufficient to service this debt.
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